Services

Tax | Business Assurance

Situation: An established real estate/construction entity organized as an S corporation with a wholly owned equipment distribution subsidiary had grown to the point where Federal and state income taxes were creating cash flow difficulties. In addition, the owner held a 25 percent interest in a real estate partnership that was about to sell the underlying property for a large gain, creating additional income tax headaches, and eroding the owner's wealth accumulation.

Action: Moore Colson established an aggressive program of annually monitoring the contracts in progress so that income was recognized in a year where no alternative minimum tax existed. This alleviated uneven cash flow drains due to unexpected tax burdens. Additionally, Moore Colson developed a state income tax apportionment strategy to avoid payment of unnecessary state income liabilities. Finally, Moore Colson worked with the owner and his attorneys to develop a strategy to liquidate the real estate partnership prior to the sale of the real property. This allowed the owner to take advantage of a like-kind exchange transaction on the real estate sale.

Result: The corporate cash flow difficulties due to unexpected income tax liabilities were eliminated. Moore Colson's state income tax strategy helped the company save $90,000 annually on its state income tax liability and the owner was able to completely eliminate the tax liability on a $.5 million capital gain.

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Situation: A $65 million distributor of new and used high tech equipment, one of Atlanta's top 50 private companies, grew to the point that financing sources and potential investors required audited financial statements. In addition, the company's rapid growth rate caused the inventory tracking and valuation processes to become so complex that existing systems could not keep up with inventory information requirements and demands. Moore Colson was engaged to perform the initial audit and assist in developing inventory, accounting, and valuation systems tailored to the company's unique inventory needs. In the middle of this engagement, a potential investor surfaced and the timetable for completing audited financial statements accelerated.

Action: Moore Colson took an ¿all hands on deckî approach and assembled the resources necessary to meet the revised timetable. The inventory accounting issues required Moore Colson and management to work closely to assess the risks concerning the inventory's physical existence and valuation methodology. Moore Colson then developed a software application to link the existing purchasing, sales, and perpetual inventory systems to a valuation model to provide an ¿audit trailî for third parties to gain comfort with inventory values included within the financial statements.

Result: The company was able to meet its timetable objective and effectively communicate financial performance to potential investors through the audited financial statements. The inventory software application developed by Moore Colson became the primary ¿talking pointî and ¿audit trailî during due diligence with regard to inventory valuation. Also, the company was able to meet its strategic objectives with financing sources and investors.

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